N.Y. Emergency Tenant Protection Act 576/74 § 10-b: Major capital improvements and individual apartment improvements in rent regulated units

§ 10-b. Major capital improvements and individual apartment

improvements in rent regulated units. (a) Notwithstanding any other

provision of law to the contrary, the division of housing and community

renewal, the "division", shall promulgate rules and regulations

applicable to all rent regulated units that shall:

1. establish a schedule of reasonable costs for major capital

improvements, which shall set a ceiling for what can be recovered

through a temporary major capital improvement increase, based on the

type of improvement and its rate of depreciation;

2. establish the criteria for eligibility of a temporary major capital

improvement increase including the type of improvement, which shall be

essential for the preservation, energy efficiency, functionality or

infrastructure of the entire building, including heating, windows,

plumbing and roofing, but shall not be for operational costs or

unnecessary cosmetic improvements. Allowable improvements must

additionally be depreciable pursuant to the Internal Revenue Service,

other than for ordinary repairs, that directly or indirectly benefit all

tenants; and no increase shall be approved for group work done in

individual apartments that is otherwise not an improvement to an entire

building. Only such costs that are actual, reasonable, and verifiable

may be approved as a temporary major capital improvement increase;

3. require that any temporary major capital improvement increase

granted pursuant to these provisions be reduced by an amount equal to

(i) any governmental grant received by the landlord, where such grant

compensates the landlord for any improvements required by a city, state

or federal government, an agency or any granting governmental entity to

be expended for improvements and (ii) any insurance payment received by

the landlord where such insurance payment compensates the landlord for

any part of the costs of the improvements;

4. prohibit temporary major capital improvement increases for

buildings with outstanding hazardous or immediately hazardous violations

of the Uniform Fire Prevention and Building Code (Uniform Code), New

York City Fire Code, or New York City Building and Housing Maintenance

Codes, if applicable;

5. prohibit individual apartment improvement increases for housing

accommodations with outstanding hazardous or immediately hazardous

violations of the Uniform Fire Prevention and Building Code (Uniform

Code), New York City Fire Code, or New York City Building and Housing

Maintenance Codes, if applicable;

6. prohibit temporary major capital improvement increases for

buildings with thirty-five per centum or fewer rent-regulated units;

7. establish that temporary major capital improvement increases shall

be fixed to the unit and shall cease thirty years from the date the

increase became effective. Temporary major capital improvement increases

shall be added to the legal regulated rent as a temporary increase and

shall be removed from the legal regulated rent thirty years from the

date the increase became effective inclusive of any increases granted by

the local rent guidelines board;

8. establish that temporary major capital improvement increases shall

be collectible prospectively on the first day of the first month

beginning sixty days from the date of mailing notice of approval to the

tenant. Such notice shall disclose the total monthly increase in rent

and the first month in which the tenant would be required to pay the

temporary increase. An approval for a temporary major capital

improvement increase shall not include retroactive payments. The

collection of any increase shall not exceed two percent in any year from

the effective date of the order granting the increase over the rent set

forth in the schedule of gross rents, with collectability of any dollar

excess above said sum to be spread forward in similar increments and

added to the rent as established or set in future years. Upon vacancy,

the landlord may add any remaining balance of the temporary major

capital improvement increase to the legal regulated rent.

Notwithstanding any other provision of the law, for any renewal lease

commencing on or after June 14, 2019, the collection of any rent

increases due to any major capital improvements approved on or after

June 16, 2012 and before June 16, 2019 shall not exceed two percent in

any year for any tenant in occupancy on the date the major capital

improvement was approved;

9. ensure that the application procedure for temporary major capital

improvement increases shall include an itemized list of work performed

and a description or explanation of the reason or purpose of such work;

10. provide, that where an application for a major capital improvement

rent increase has been filed, a tenant shall have sixty days from the

date of mailing of a notice of a proceeding in which to answer or reply;

11. establish a notification and documentation procedure for

individual apartment improvements that requires an itemized list of work

performed and a description or explanation of the reason or purpose of

such work, inclusive of photographic evidence documenting the condition

prior to and after the completion of the performed work. Provide for the

centralized electronic retention of such documentation and any other

supporting documentation to be made available in cases pertaining to the

adjustment of legal regulated rents; and

12. establish a form in the top six languages other than English

spoken in the state according to the latest available data from the U.S.

Bureau of Census for an individual apartment improvement rent increase

for a tenant in occupancy which shall be used by landlords to obtain

written informed consent that shall include the estimated total cost of

the improvement and the estimated monthly rent increase. Such consent

shall be executed in the tenant's primary language. Such form shall be

completed and preserved in the centralized electronic retention system

to be operational by June 14, 2020, provided further that any changes to

the form required due to the individual apartment improvement being

permanent shall be completed as of October 14, 2024. Nothing herein

shall relieve a landlord, lessor, or agent thereof of such person's duty

to retain proper documentation of all improvements performed or any rent

increases resulting from said improvements.

13. (i) where an owner combines two or more vacant housing

accommodations or combines a vacant housing accommodation with an

occupied housing accommodation, such initial rent for such new housing

accommodation shall be the combined legal rent for both previous housing

accommodations, subject to any applicable guideline increases and any

other increases authorized by this chapter including any individual

apartment improvement increases applicable for both housing

accommodations. If an owner combines a rent regulated accommodation with

an apartment not subject to rent regulation, the resulting apartment

shall be subject to this act. If an owner increases the area of an

apartment not subject to rent regulation by adding space that was

previously part of a rent regulated apartment, each apartment shall be

subject to this act.

(ii) where an owner substantially increases the outer dimension of a

vacant housing accommodation, such initial rent shall be the prior rent

of such housing accommodation, increased by a percentage that is equal

to the percentage increase in the dwelling space and such other

increases authorized by this act including any applicable guideline

increase and individual apartment improvement increase that could be

authorized for the unit prior to the alteration of the outer dimensions.

(iii) notwithstanding subparagraphs (i) and (ii) of this paragraph,

such increases may be denied based on the occurrence of such vacancy due

to harassment, fraud, or other acts of evasion which may require that

such rent be set in accordance with section twelve of this act.

(iv) where the vacant housing accommodations are combined, modified,

divided or the dimension of such housing accommodation otherwise altered

and these changes are being made pursuant to a preservation regulatory

agreement with a federal, state or local governmental agency or

instrumentality, the rent stabilized rents charged thereafter shall be

based on an initial rent set by such agency or instrumentality.

(v) where an owner substantially decreases the outer dimensions of a

vacant housing accommodation, such initial rent shall be the prior rent

of such housing accommodation, decreased by the same percentage the

square footage of the original apartment was decreased by and such other

increases authorized by this act including any applicable guideline

increase and individual apartment improvement increase that could be

authorized for the apartment prior to the alteration of the outer

dimensions.

(vi)(1) when an owner combines two or more rent regulated apartments,

the owner may use each of the previous apartments' remaining individual

apartment improvement allowances for the purposes of a temporary

individual apartment improvement rent increase. The owner shall

subsequently designate a surviving apartment for the purposes of

registration that has the same apartment number as one of the prior

apartments. If that prior apartment has any reimbursable individual

apartment improvement money remaining after the combination, that money

may be reimbursed for future individual apartment improvements

undertaken within the subsequent fifteen years following the

combination.

(2) in order for an owner to qualify for a temporary individual

apartment improvement rent increase when apartments are combined, the

requirements for an individual apartment improvement, including all

notification requirements under this act shall be met.

(vii) owners shall maintain the records and rent histories of all

combined apartments, both prior to and post combination, for the

purposes of rent setting, overcharge and all other proceedings to which

the records are applicable.

(b) The division shall establish an annual inspection and audit

process which shall review twenty-five percent of applications for a

temporary major capital improvement increase that have been submitted

and approved. Such process shall include individual inspections and

document review to ensure that owners complied with all obligations and

responsibilities under the law for temporary major capital improvement

increases. Inspections shall include in-person confirmation that such

improvements have been completed in such way as described in the

application.

(c) The division shall issue a notice to the landlord and all the

tenants sixty days prior to the end of the temporary major capital

improvement increase and shall include the initial approved increase and

the total amount to be removed from the legal regulated rent inclusive

of any increases granted by the applicable rent guidelines board.